| Demand Dynamics With Socially Evolving Preferences (1998) | |||||||||||||||||
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| this paper witnessed at a seminar the horror of most colleagues when Werner Hildebrand, presenting some further development on his theory of demand (Hildebrand (1994)) provocatively suggested more or less that "preferences and choices are matters for psychiatrists and not for economists", while the task of the latter should be primarily to establish some statistical conditions under which basic propositions of economic theory -- such as downward sloping demand curves etc. -- hold in the aggregate, in presence of heterogeneous, and possibly "irrational" consumers. In a nutshell, the provocation highlights, first of all, a major divide cutting across the economic discipline -- as well as other social sciences --, namely, how seriously should one take standard utility theory (with or without its more recent refinements) and the associated "rational" theory of decision making as the foundation of a descriptive theory of demand? (Another major problem concerns the aggregate properties of diverse demand schedules, no matter how constructed: we shall come to that below.) Needless to say, the majority of the economic profession seems to take that type of microeconomic foundations of decisions very seriously indeed, entrenched as they are with deep ("anthropological") views on the nature of "rationality" and self-seeking behaviours, passed through successive generations via conventional teaching tools such as "indi#erence curves" and the like, and further justified by their purported role in bridging descriptive and normative analyses (welfare theorems, etc.). However, admittedly minority views in economics (but nearly "mainstream" in other social disciplines) claim that classic decision theory has little to o#er by way of the interpretation of what people actually do and that o... | |||||||||||||||||
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